AV Birla group on road to recast

MUMBAI: The Aditya Birla group is on the restructuring road. The conglomerate, is one of India's largest business houses, is taking steps to reduce its presence in areas like power while increasing its thrust on telecom and retail.

The Rs 38,000-crore group has started efforts in this direction by selling Rosa power and is learnt to be on the lookout for a similar plan for Bina power.

The moves are being seen as the initial part of a larger exercise by the 150-year-old group to reorient itself. Senior group executives said that while the focus on businesses such as metals, cement and others would continue, there could be an increased thrust on fast-growing businesses such as retail and telecom.

Rosa is a 578 MW coal-fired power plant to be set up in Shahajanpur in Uttar Pradesh, where Reliance Energy is already building the world's largest thermal power plant. Reliance will build the proposed Rosa thermal power plant at an estimated cost of more than Rs 2,600 crore. The Aditya Birla group spokesperson was unavailable for comment.

The group is also dragging its feet on the Bina project. Started as a joint venture with the UK-based PowerGen, this 500 MW power project was also put on the backburner after PowerGen left India.

Senior executives said while the projects were initiated more than a decade back, changes in the industry had made the projects less competitive. "Our captive power projects are vital and a key part of our efforts to maintain low cost. But (an) independent power project is different," they said.

Birlas recently announced the appointment of Sanjeev Aga as the managing director of its telecom venture, Idea Cellular. The move, coupled with the reports of selling part of the group's stake in Idea to private equity groups, have signalled the intention to generate funds to finance future projects in telecom.

Retail is another area where the group has announced its intentions. "It's an interesting area and we are looking at the space," Chairman Kumar Mangalam Birla said recently.

Although the group hasn't made any official statement so far, there are indications that a management hierarchy is being drawn up with Sumant Sinha, CFO, as head of the retail exercise.

Organised retail is a fast growing sector that has been attracting large Indian corporate houses. A mere 3% of the estimated $200bn in potential retail sales has prompted leading business groups such as Reliance Industries, the Tatas and others to script their retail forays.